N8Billion Media Debt Burden, New 180-Day Payment Cycle Unsettle Ad Industry
The new 180-day invoice payment cycle being smuggled albeit “silently” into the Nigerian Media and advertising industry and the huge debt burden of a whopping Eight Billion Naira (8bn) have opened a new phase of controversies and disenchantment in the highly segmented Nigerian advertising and media market.
Observers agreed that the huge media debt profile of client companies, many of whom are multinational companies, have been creating some operational challenges to the media, especially those in the out – of – home advertising, electronic and the print media without sparing advertising agencies.
This is coming against the backdrop of promises made last year by all relevant stakeholders to address the challenge of media debt in brand management and management of brand business in Nigeria.
Industry sources have revealed that all the agencies are facing acute liquidity crisis largely due to the huge debts being owed by the client companies known as the advertisers.
An economic intelligence research conducted recently revealed that over 8billion naira in unpaid fees by the advertisers, many of whom are multinationals are currently plaguing smooth business operations of the media and some agencies.
While the agencies and the media were believed to have fulfilled their own part of the contractual agreement by executing the contracts, they are now faced with the challenge of getting the clients honour their own part of the bargain by paying the invoices that have over – stayed agreed working grace period of 45 days.
The delay in payment, it was gathered has been attributed to the sudden twist in the existing payment due date of 45 days by multinational companies who are said to be demanding for 180 days to process media invoices before payment is made.
However, the Nigerian advertising practitioners and media owners have decried this request stating that it negates what is fashionable and obtainable globally.
An industry operator, Mr. Sola Bamgbose who is a consultant brand handler to a telecom company described as “uncharitable the request by the multi-nationals asking for 180 days of grace to settle the media debt. He stated that such a request in this modern day and time negates the true spirit of fairness and justice, as some of these companies do not ask consumers of their goods, products and services to come and pay them after 180 days of consumption.”
His words: “The request by multinationals to extend 45 days of grace to 180 days before paying their media vendors is uncharitable, unfair and unjust. How will they justify this request when in actual fact they collect money instantly from the consumers of their goods and services. Do they ask consumers to come and pay for their goods after 180 days of purchase”; he queried.
In a similar vein, Mr. Kola Ayanwale, a senior advertising professional and Group Managing Director of Centerspread Grey said the media debt challenge which has been ageless is now taking a new twist if clients now demand for 180 days! He stated that such demand cannot be justified while the companies in their home countries don’t do such for the media in their respective countries. He however advised media owners, the advertising agencies and other stakeholders to rally in resolving the ever – rising media debt.
In his view, theVice-President of Media Independents Association of Nigeria, MIPAN, Mr. Femi Adeusi, said he is yet to know about the 180 days request, but nonetheless decried the undue delay in paying the media.
This, he also attributed to the challenges in the terms of agreements for some of these businesses. He stated that some business terms and agreements jointly agreed with clients may cause delay in payments. He advised that agencies and media owners should always scrutinize terms before they enter into business agreements.
Aside this, Mr. Femi Adeusi, Managing Director of BrandEye stated that any media owner, who is aggrieved with any MIPAN members, should not hesitate to approach the Association with proofs of their cases which include contract terms and agreement and also the proof of job performance as well as their written petition.
Adeusi also attributed delay in payment to poor job execution or disagreement or failure in full and agreed implementation on media contracts. He then enjoined media owners to be very mindful in the ways they execute and handle clients’ jobs.
In his own contribution, Chairman of STB McCann Sir Steve Omojafor enjoined media owners to jointly write petitions to ADVAN with a view to getting the buy-in and support of the advertisers’ umbrella body in cajoling members to pay the media.
Specifically, he condemned the idea of a 180-day request by some multinationals, saying that media houses will collapse if care is not taken. He canvassed a joint industry effort to resolve some of these lingering issues as the industry today is beset with myriads of challenges.
Similarly, President of the Outdoor Advertising Association of Nigeria, (OAAN) Mr. Babatunde Adedoyin said the huge debts being owed its members by the advertisers have almost grounded the operations of all out-of-home companies in Nigeria.
Specially, he said “there appears to be a deliberate attempt by the multinationals to cripple the operations of OOH with the new talk on 180-day”.
Following the huge debt “he stated that his association has written letters of appeals to some of the companies and their agencies all to no avail. He pleaded that ADVAN and relevant stakeholders should help to appeal to the advertisers and their media buying agencies.
A few years ago, Advertising Practitioners Council of Nigeria had intervened in the media debt issue by setting up a Special Committee on Media Debts Issue (ACOMDI). The committee with members drawn from the major sectoral associations, namely ADVAN, AAAN, BON, MIPAN, OAAN and NPAN was chaired by a broadcaster and fellow of Advertising, Alhaji Ayodele Sulaiman met to review and submitted reports on media debts totaling N2billion as at 2007.
However, the debts have grown over the years especially because of the weak regulatory environment for almost four years now, APCON has operated without its relevant council members in place. This has created a huge gap in meeting its mandatory regulatory tasks. It was gathered that the practice in Nigeria is unlike South Africa where advertisers are made to pay heavy sanction and financial penalty for defaulting on payment.
Contacted on the issue, ADVAN President, Mrs. Folake Ani – Mumunney stated that the association will do everything possible to encourage debtor members to pay but clarified that the ADVAN Charter does not include enforcement or debt monitoring.
Sadly, the multinationals are alleged to be taking undue advantage of the weak regulatory environment in keeping the media in abeyance over payment of their debts. Many industry watchers are bothered that these companies are allowed to carry on with this act of impunity without any check.
Mrs. Ani-Mumunney who said that the association is out to promote cordial relations and business growth amongst other stakeholders revealed that some of the allegations on indebtedness and the 180 days request by some advertisers are totally new to her as nobody has ever brought such a thing to her notice.